WASHINGTON - New York Sen. Chuck Schumer says a grand compromise on overhauling the tax code is not possible if it's modeled after the 1986 deal agreed to by President Ronald Reagan.

His reason: The 1986 deal lowering the top personal income tax rate to 28 percent was revenue-neutral, but additional tax revenue is needed this time to reduce the federal debt.

In a speech delivered this morning at the National Press Club, Schumer said he supports President Barack Obama's goal of raising $1.5 trillion in new revenue over 10 years and, in order to achieve that, congressional leaders should abandon efforts to lower tax rates for high-income households.

By high income, Schumer said he was using the president's definition of households earning more than $250,000, although he personally would prefer the line to be drawn at $1 million.

"It would be a huge mistake to take the dollars we gain from closing loopholes and put them into reducing rates for the highest income brackets, rather than reducing the deficit," Schumer said. "To fix the deficit, we of course need to cut spending. The Budget Control Act made a down payment of $900 billion in domestic discretionary cuts."

Schumer said most Democrats also would include reforms to entitlement programs as part of a grand bargain, which should serve as an incentive for Republicans.

And the expiration of the Bush administration's tax cuts at the end of the year should also serve as an incentive. Schumer said Republicans "may soon realize that it is far better to extend 98 percent of the tax cuts than none at all."

But the ranking Republican on the Senate Finance Committee quickly rejected the proposal.

"The default position of the president's party is our economy, debt and entitlement programs are just fine and the only solution is to raise taxes on one of the most productive segments of our economy," stated Utah Sen. Orrin Hatch.

Schumer said the roadblock to past efforts to reach a grand compromise on federal spending, entitlement reform and taxes has been the insistence that lower tax rates for the wealthy must be part of the package.

Only two of the three goals - generating revenue to reduce the nation's $16 trillion debt, lowering the rates paid by the wealthy and preventing tax increases for middle-income households -- are possible, said Schumer.

"A 1986-style approach that promises upfront rate cuts for the wealthy is almost guaranteed to give middle-income earners the short end of the stick,'' Schumer said. "The reason is, in order to raise enough money to both reduce tax rates and cut the deficit you would need to slash deductions and credits on a far greater scale than we did in 1986. Middle-income earners would not be spared.''

Recent studies by groups such as the Tax Policy Center and the congressional Joint Economic Committee have found that Republican proposals for lower tax rates would effectively result in higher income tax bills for middle-income households.

Rep. Paul Ryan's proposal for a top income tax rate of 25 percent would result in a $2,681 increase in taxes for a married couple earning $100,000, according to the Joint Economic Committee.